What are the key changes proposed to GRAP 25 on Employee Benefits?

  • September 8, 2020
  • Posted by: Julianne Vissie
  • Category: Blog
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What are the key changes proposed to GRAP 25 on Employee Benefits?

Exposure Draft on Review of GRAP 25 on Employee Benefits (ED 184): What are the key proposed changes?

The proposed changes are summarised in the table below. More information on the proposed changes can be obtained from the ASB website here.

Type of employee benefit Description Proposed changes to the principles
Short-term employee benefits Benefits due wholly before twelve months after the end of the reporting period in which service was rendered. No changes; guidance added.
Post-employment benefits: Defined contribution plans Employer pays fixed contributions into separate fund and has no further obligations to pay contributions. No changes; guidance added.
Post-employment benefits: Defined benefit plans Plans other than defined contribution plans. The obligation and related plan assets (if any) are combined in a new component, the “net defined benefit asset/liability”.
Three components are introduced:

•      Current service cost, past service cost (including curtailments), and settlement cost are combined and called “service cost”.

•      Interest cost and expected return on plan assets are presented on a net basis as “net interest expense / revenue”.

•      Actuarial gains and losses, return on plan assets and changes in the effect of the asset ceiling are grouped and called “remeasurements”.
Guidance is provided on:

•      Actuarial assumptions, including the effect of employee and third-party contributions on service cost and remeasurements.

•      Plan amendments, curtailments and settlements, clarifying when the effect of the asset ceiling is considered and the information to be used in determining current service cost and net interest.
A disclosure objective, and guidance on achieving the objective, are introduced.
Other long-term employee benefits All employee benefits other than short-term, post-employment and termination benefits. A disclosure objective, and guidance on achieving the objective, are introduced.
Termination benefits Provided in exchange for termination of employment. Guidance is provided on:

•      distinguishing them from other employee benefits;

•      when they should be recognised; and

•      their measurement.

A disclosure objective, and guidance on achieving the objective, are introduced.

Upcoming articles will explore the key changes to post-employment defined benefit plans, and other changes respectively.

Where can the ED be accessed and how can you provide comment?

ED 184 has been published on the ASB’s website and can be accessed here. Comment can be submitted via the website or to the Secretariat of the ASB at info@asb.co.za by 30 November 2020.

The views expressed in this article are those of Secretariat and not the ASB Board.

 



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